IDEAS home Printed from https://ideas.repec.org/p/smo/cpaper/2cl.html
   My bibliography  Save this paper

The Impact of Social Variables on Financial Performance

Author

Listed:
  • Christopher Lim

    (Lucas College and Graduate School of Business)

Abstract

In recent years, the discussion on corporate social responsibility has surged and firm management are seen to devote more efforts and resources towards improving their social image. Even under such intense public scrutiny, product recalls in the electronics, automotive, and healthcare sectors have not declined. Quality issues persist due to the severe competitive pressure to meet time to market’ product launches. Carbon emissions and green-house gases generated by industrial manufacturing, waste disposal, and automotive vehicles also continue to rise. The research purpose was to investigate the impact of individual social variables on financial performance. This research paper used multiple linear regression to assess the relationship between key indicators of corporate social responsibility and financial performance from 372 corporations in 2014. The theoretical foundation was Freeman’s stakeholder theory. Environment, community, human rights, diversity, employee relations, product quality, and corporate governance were measures of social performance. Return on assets was used to measure financial performance. When independent social variables were evaluated with corporate financial performance, employee relations and product quality in the healthcare sector, and community in the financial sector, were found to be positively significant. Environment, product quality, and corporate governance in the financial sector, and employee relations in the consumer and energy sectors, were found to be negatively significant. This research revealed that the relationship between some social variables and financial performance are significant, but not always in a positive direction. Based upon the findings established in this paper, managers can use the findings to evaluate their firm’s social position, develop strategies to address gaps, and undertake actions to enhance their firm’s social performance, thereby creating positive social change in the community.

Suggested Citation

  • Christopher Lim, 2019. "The Impact of Social Variables on Financial Performance," Proceedings of the 12th International RAIS Conference, April 3-4, 2019 2CL, Research Association for Interdisciplinary Studies.
    • Handle: RePEc:smo:cpaper:2cl
    as

    Download full text from publisher

    File URL: http://rais.education/wp-content/uploads/2019/04/2CL.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Francesco Perrini & Angeloantonio Russo & Antonio Tencati & Clodia Vurro, 2011. "Deconstructing the Relationship Between Corporate Social and Financial Performance," Journal of Business Ethics, Springer, vol. 102(1), pages 59-76, March.
    2. Kiyoung Chang & Incheol Kim & Ying Li, 2014. "The Heterogeneous Impact of Corporate Social Responsibility Activities That Target Different Stakeholders," Journal of Business Ethics, Springer, vol. 125(2), pages 211-234, December.
    3. Zhi Tang & Clyde Eiríkur Hull & Sandra Rothenberg, 2012. "How Corporate Social Responsibility Engagement Strategy Moderates the CSR–Financial Performance Relationship," Journal of Management Studies, Wiley Blackwell, vol. 49(7), pages 1274-1303, November.
    4. Jaepil Choi & Heli Wang, 2009. "Stakeholder relations and the persistence of corporate financial performance," Strategic Management Journal, Wiley Blackwell, vol. 30(8), pages 895-907, August.
    5. Joanna Crossman, 2011. "Environmental and Spiritual Leadership: Tracing the Synergies from an Organizational Perspective," Journal of Business Ethics, Springer, vol. 103(4), pages 553-565, November.
    6. Harrison, Jeffrey S. & Wicks, Andrew C., 2013. "Stakeholder Theory, Value, and Firm Performance," Business Ethics Quarterly, Cambridge University Press, vol. 23(1), pages 97-124, January.
    7. Olaf Weber & Michael Diaz & Regina Schwegler, 2014. "Corporate Social Responsibility of the Financial Sector – Strengths, Weaknesses and the Impact on Sustainable Development," Sustainable Development, John Wiley & Sons, Ltd., vol. 22(5), pages 321-335, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Izabela Diana Hada, 2020. "Considerations Regarding the Assessment and Measurement of Financial Performance," Book chapters-LUMEN Proceedings, in: Carmen NÄ‚STASE (ed.), 16th Economic International Conference NCOE 4.0 2020, edition 1, volume 13, chapter 11, pages 115-129, Editura Lumen.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Piotr Ratajczak, 2021. "The mediating role of natural and social resources in the corporate social responsibility—corporate financial performance relationship," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(1), pages 100-119, January.
    2. Saridakis, Charalampos & Angelidou, Sofia & Woodside, Arch G., 2023. "How historical and social aspirations reshape the relationship between corporate financial performance and corporate social responsibility," Journal of Business Research, Elsevier, vol. 157(C).
    3. Sergiy D. Dmytriyev & R. Edward Freeman & Jacob Hörisch, 2021. "The Relationship between Stakeholder Theory and Corporate Social Responsibility: Differences, Similarities, and Implications for Social Issues in Management," Journal of Management Studies, Wiley Blackwell, vol. 58(6), pages 1441-1470, September.
    4. John A. Parnell, 2017. "Cronyism from the Perspective of the Firm: A Cross-National Assessment of Nonmarket Strategy," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 32(Fall 2017), pages 47-74.
    5. Lee, Gilsoo & Cho, Sam Yul & Arthurs, Jonathan & Lee, Eun Kyung, 2020. "Celebrity CEO, identity threat, and impression management: Impact of celebrity status on corporate social responsibility," Journal of Business Research, Elsevier, vol. 111(C), pages 69-84.
    6. Francesco Gangi & Mario Mustilli & Lucia Michela Daniele & Maria Coscia, 2022. "The sustainable development of the aerospace industry: Drivers and impact of corporate environmental responsibility," Business Strategy and the Environment, Wiley Blackwell, vol. 31(1), pages 218-235, January.
    7. Jia Xu & Jiuchang Wei & Liangdong Lu, 2019. "Strategic stakeholder management, environmental corporate social responsibility engagement, and financial performance of stigmatized firms derived from Chinese special environmental policy," Business Strategy and the Environment, Wiley Blackwell, vol. 28(6), pages 1027-1044, September.
    8. Pornanong Budsaratragoon & Boonlert Jitmaneeroj, 2021. "Corporate Sustainability and Stock Value in Asian–Pacific Emerging Markets: Synergies or Tradeoffs among ESG Factors?," Sustainability, MDPI, vol. 13(11), pages 1-25, June.
    9. Mujtaba Ahsan, 2020. "Entrepreneurship and Ethics in the Sharing Economy: A Critical Perspective," Journal of Business Ethics, Springer, vol. 161(1), pages 19-33, January.
    10. Francesco Gangi & Jérôme Méric & Rémi Jardat & Lucia Michela Daniele, 2019. "Business for society," Post-Print hal-02382307, HAL.
    11. Jeffrey S. Harrison & Joyce van der Laan Smith, 2015. "Responsible Accounting for Stakeholders," Journal of Management Studies, Wiley Blackwell, vol. 52(7), pages 935-960, November.
    12. Li, Xinlan & Li, Changhong & Wang, Zhan & Jiao, Wenting & Pang, Yiwen, 2021. "The effect of corporate philanthropy on corporate performance of Chinese family firms: The moderating role of religious atmosphere," Emerging Markets Review, Elsevier, vol. 49(C).
    13. Xingping Jia, 2020. "Corporate social responsibility activities and firm performance: The moderating role of strategic emphasis and industry competition," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(1), pages 65-73, January.
    14. Carlos Ferro-Soto & Luz Amparo Macías-Quintana & Paula Vázquez-Rodríguez, 2018. "Effect of Stakeholders-Oriented Behavior on the Performance of Sustainable Business," Sustainability, MDPI, vol. 10(12), pages 1-27, December.
    15. Gregory Jackson & Virginia Doellgast & Lucio Baccaro, 2018. "Corporate Social Responsibility and Labour Standards: Bridging Business Management and Employment Relations Perspectives," British Journal of Industrial Relations, London School of Economics, vol. 56(1), pages 3-13, March.
    16. Silvana Signori & Leire San-Jose & Jose Luis Retolaza & Gianfranco Rusconi, 2021. "Stakeholder Value Creation: Comparing ESG and Value Added in European Companies," Sustainability, MDPI, vol. 13(3), pages 1-16, January.
    17. Long Zhang & John A. Parnell & Chuanhui Xiong, 2021. "Market and Nonmarket Strategies (NMS) in China: Performance Payoffs in Turbulent Environments," Asian Business & Management, Palgrave Macmillan, vol. 20(5), pages 644-665, November.
    18. Zhi Tang & Jintong Tang, 2016. "The Impact of Competitors–Firm Power Divergence on Chinese SMES’ Environmental and Financial Performance," Journal of Business Ethics, Springer, vol. 136(1), pages 147-165, June.
    19. Wei Jiang & Aric Xu Wang & Kevin Zheng Zhou & Chuang Zhang, 2020. "Stakeholder Relationship Capability and Firm Innovation: A Contingent Analysis," Journal of Business Ethics, Springer, vol. 167(1), pages 111-125, November.
    20. Bimbo Onaolapo Adejare & Ekpenyong Ekpenyong Udofia & Gbemi Oladipo Olaore, 2023. "Strategy integration, sustainable drivers of firm internationalization performance—Moderated by environmental uncertainty and firm capabilities," Journal of International Entrepreneurship, Springer, vol. 21(3), pages 301-328, September.

    More about this item

    Keywords

    social variables; corporate social responsibility; financial performance; stakeholder theory;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:smo:cpaper:2cl. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eduard David (email available below). General contact details of provider: http://rais.education/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.